European markets are holding up better, where ArcelorMittal , the world's largest steelmaker, said second-quarter profits surged to a post-crisis high, beating forecasts.

Nippon Steel, which had skipped its full-year earnings forecast in April due to an uncertain market in the aftermath of the quake, forecast a 230 billion yen ($2.95 billion) recurring profit for the year to March 2012.

The outlook exceeds a mean estimate of 197.8 billion yen in a poll of 21 analysts by Thomson Reuters I/B/E/S and compares with last year's profit of 226.3 billion yen.

SUPPLY CHAIN RECOVERS

Overall, we expect a gradual recovery. Supply chains are returning to normal and, with them, production, the company said in a statement. A strong yen and tight electricity supplies in Japan, however, still remain a concern, it added.

The yen has risen to about 78 to the dollar from above 85 in April, sapping export returns.

That more cautious outlook comes after U.S. rival AK Steel Holding Corp on Tuesday forecast a sharp drop in third-quarter profit and U.S. Steel Corp also said this week it expected a lower quarterly profit.

In the first quarter Nippon Steel reported a 7.9 percent dip in recurring profit for April-June to 57 billion yen, compared with a 61.89 billion yen profit a year ago. Recurring profit is pretax and excludes special items.

JFE booked a 51 percent fall in quarterly profit to 25.4 billion yen. But many analysts say excluding such temporary factors like inventory valuation gains and low-cost inventory of iron and coal, quarterly profit may have been slightly above breakeven.

Nippon Steel shares, which are nearly back to their pre-quake levels, gained 1.1 percent after it released its results and outlook. JFE's stock fell 1.5 percent.